The Tax Publishers2021 TaxPub(DT) 1330 (Mum-Trib)

INCOME TAX ACT, 1961

Section 251(2)

Where compensation received by assessee towards displacement in terms of Development Agreement was not a revenue receipt and constitute capital receipt as the property has gone into reĀ¬development and compensation was normally paid by the builder on account of hardship faced by owner of the flat due to displacement of the occupants of the flat, therefore, order passed by CIT(A) was quashed.

Appeal [CIT(A)] - Compensation for alternative accommodation - Compensation was paid by builder on account of hardship faced by owner of flat -

Assessee was given compensation for alternative accommodation in terms of Development agreement. According to CIT(A), the amount received was over and above the rent actually paid by the assessee and therefore, the same has to be taxed accordingly. Assessee filed this appeal against the order passed by CIT(A) contending that CIT(A) erred in enhancing the assessment on account of rental income which represented compensation for alternate accommodation by the developer. Held: Compensation received by the assessee towards displacement in terms of Development Agreement was not a revenue receipt and constitute capital receipt as the property has gone into reĀ¬development. In such scenario, the compensation was normally paid by builder on account of hardship faced by owner of the flat due to displacement of the occupants of the flat. The said payment was in the nature of hardship allowance/rehabilitation allowance and was not liable to tax. Therefore, order passed by CIT(A) was quashed.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11



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